Okayfine, so last week Realogy joined the list of IPO’s and now public real estate sector companies.
They are a franchisor, but other recent IPOs have included Zillow, Trulia and several others. In turn, the infusion of cash that came from those IPOs led those gobble up some strategic partners and assimilate them into their operations. But much of the capital went to pay of existing debt and create more operating capital to extend their burn rate.
What does this do to the industry in today’s environment? It essentially kicks the can down the road. It enables companies, whether they are franchisors or syndicators or whoever to NOT solve the BIG issue. They can look PAST the elephant in the living room.
So who or what is this elephant you ask? It is their relevance. Our industry is starting to fragment as it asks itself some serious questions such as:
1) Does a franchise actually ADD VALUE to an agent in today’s market? If so, what value does it add and how much is that worth?
2) Syndicators – same question – Does a syndicator actually ADD VALUE to an agent in today’s market? If so, what value does it add and how much is that worth?
3) Brokers – same question – Does a broker actually ADD VALUE to an agent in today’s market? If so, what value does it add and how much is that worth?
Add the most important question of all: Brokers, Franchisors, and Syndicators are now actively competing to provide agents services and are “duking it out” by one entity giving agents a freebie here and another entity giving a freebie there…and agents are in the business of auctioning off their souls to the entity that provides them the most enticing freebie of the day.
In my opinion this is NOT SUSTAINABLE and will lead (eventually) to a highly fragmented industry and NONE of the above entities being profitable AND THUS NOT STABLE. And therein lies the rub.
IPOs are great ways to shift the burden of debt somewhere else. (I guess) It gets the banks and their demands for profitability off of your back, but that is only temporary. The REAL answer is profitability, sustainability and adding value. Just because you have $$$ in the bank account, does not negate the need for a solid plan to get that.
So what are your thoughts? Are we as an industry going to play Outwit. or Outplay. in this industry’s came of SURVIVOR? or are we simply trying to Outlast.?
I welcome your thoughts.